Wednesday, October 30, 2013

The financial crisis through which we have all
suffered (by 'we' I mean the ordinary man and woman), will turn out to have
been less of a crisis and more of a revolution.

Ironically, if you have been in a well-paying
job, in banking, consulting, IT, head hunting, recruitment, or any of the
adjunct functions which serve the City and the financial sector; or you have
been in the professional classes, the law, auditing and accounting; or the tame
and timid regulatory agencies, the financial crisis has not really caused much
damage to you in the longer term.

Oh sure, you may not have drawn down quite such
high bonuses as you were used to enjoying, but you have still been able to
continue to live very comfortably. Interest rates have been the lowest they
have been in any living memory, and they have remained at neo-negative rates
for a long period of time. You have been enabled to trade up in your property
purchases, borrowing significant sums of money, leveraged on your existing
properties, and in so doing, you have enabled the property market to resist the
ordinary impact of the crisis.

To a very large number of people however, the
'squeezed middle', those who are coming to the end of their immediate working
lives, but who are still supporting elderly parents, as well as children who
cannot find jobs; those who are still able to work and at the top of their
skills ladder in terms of knowledge and experience, but who are deemed 'too
old' to be employed by an ageist jobs market because they are over 55; those
who have been made redundant at the wrong age and thus forcibly retired and who
have been living on income from insufficient pensions, and who have watched
while the government has squeezed the life out of community spending in the
name of 'austerity'; those who work in teaching, nursing, policing, the fire
service or any of the other vital municipal service provisions on which our
communities rely so heavily, there is no end to the damage that the impact of
the financial crisis is causing.

The important distinction here is that the very
sector whose criminogenic behaviour caused the financial crisis in the first
place, the shady banksters with their shoddy banking practices and their
concomitant criminal banking activities; the legal services which were used to
protect their interests when the criminal banks were confronted by angry
clients who demanded redress; the complicit accountants who signed off on
every-increasingly dubious audits, and who conspired to make the books balance
and the figures look good; and the complicit regulators who looked the other
way and became apologists for the wrong-doing of their sector, all these
services continue to prosper and thrive.

We have observed the actions of a Parliamentary
Commission on Banking Standards which has sat in judgement on the actions of
those who wrought so much damage to the body financial, but what has really
happened as a result of their deliberations?

Frankly, very little!

The real outcome of the financial crisis has
been to cement in post those whose activities and actions did so much to damage
the interests of a very large sector of the British people, and has, by so
doing, enabled the whole rotten edifice to remain unreformed.

Take, as an example, the HBOS affair.

Back in April this year, the Parliamentary
Commission on Banking Standards published its Fourth Report - ‘An accident
waiting to happen’: The failure of HBOS.

Commenting on the publication of its Fourth
Report, the Chairman of the Parliamentary Commission on Banking Standards, Andrew
Tyrie MP, said:

"The HBOS story is one of catastrophic
failures of management, governance and regulatory oversight.

The sums would never have added up: the
Commission has estimated that, taken together, the losses incurred by the
Corporate, International and Treasury divisions would have led to insolvency,
regardless of funding and liquidity problems, had HBOS not been bailed out by
both Lloyds and the taxpayer.

The Commission concluded that primary
responsibility for these failures should lie with the former Chairman of HBOS,
Lord Stevenson, and its former Chief Executives, Sir James Crosby and Andy
Hornby.

Only Peter Cummings has faced regulatory
sanction for HBOS’ failures. The Commission was surprised by this.

The Commission stated openly that It was
unsatisfactory that the FSA appears to have taken no steps to establish whether
the former leaders of HBOS are fit and proper persons to hold the Approved
Persons status elsewhere in the UK financial sector. The Commission has
therefore asked the regulator to consider whether these individuals should be
barred from undertaking any future role in the sector.

For the future, far more needs to be done.
Those responsible for bank failures should be held more directly accountable
for their actions and face sanction accordingly. The Commission will return to
this issue in its Final Report.

The regulators also have a lot of explaining to
do when it comes to their role earlier in the HBOS debacle. From 2004 up until
the latter part of 2007, the FSA was ‘not so much the dog that didn’t bark as
the dog barking up the wrong tree’.

The FSA responded favourably to a Treasury
Committee request for a comprehensive report, similar to that prepared on RBS,
not just into the failure of HBOS but also into the FSA’s own conduct. The
Treasury Committee has appointed specialist advisers whose job will be to
ensure that this work is done thoroughly..."

So, taken in the round, this means that a major
bank collapsed because those with the responsibility to ensure that they should
have done their job properly, failed to exercise their responsibilities
properly, with the result that others had to be appointed to oversee their
actions.

And the outcome has been to sweep the whole
fucking mess under the carpet in a traditional British way of reconciling these
scandals.Essentially, it has been decided that those responsible for the
biggest banking crash in living memory, to say nothing of the resultant scams,
frauds and other examples of financial skulduggery will not face any kind of
scrutiny by regulators or government. The revolving door at the top will go
round and former regulators will become bankers, accountants will become regulators,
the most egregious will be allowed to slink away with their pensions and their
pay-off's, while you and I will be ritually and righteously screwed!

Why?

Because I am slowly beginning to realise it is
becoming clearer that the aftermath of the financial crash and its attendant
outcomes was not just an accident waiting to happen. It was carefully thought-through
by a group of powerful elites who realised that they could use the implications
of the mess left behind by Gordon Brown and Ed Balls.

They could begin to dismantle the benefit
culture ethos which had undeniably been allowed to spread like a virus under
Brown. Brown believed that the City was bringing in the money because he wanted
to believe the bullshit the City told him. He, in turn, extolled their actions
in after-dinner speeches at the Mansion House, while spending public money like
a man with no arms, until even he was forced to realise there was nothing left
in the pot, as Liam Byrne so eloquently reminded his successor in post!

By driving out the poor, the indigent and the
work-shy and relocating them to other useless towns and cities in the Midlands
and the North, they would free-up a workforce in London who would be willing to
work for limited or minimum wages and zero-hours contracts, made up very much
of European immigrants driven to the UK by the awful financial conditions at
home, ready and willing to service the new post-crisis economy planned for the
new London.

In addition, their ambitions have begun a root
and branch restructuring of London and the South East, turning the whole sector
into an elite commercial and financial 'business' centre, coupled with a highly
desirable residential venue of choice for the fantastically wealthy, who will
want to use all the banking and financial services offered by the 'new City
elites', provided by a new breed of 'ask no questions' lawyers and accountants,
and protected by Boris Johnson's incessant promotion of the constantly parroted
demand for foreign capital, of whatever nature and provenance, to find its home
in London.

The London of the future is intended to become the
leading global financial centre, which will become an offshore-haven in its own
right for those with money (and there are plenty of them in other countries) to
invest.

I have just returned from a business trip,
which I shared with an architectural engineer. He was telling me of the vast
number of new high-rise residential buildings (over 60 at the last count) that
are being constructed in the centre of London. He talked about the number
which, once completed, will stand completely empty, having been already
purchased 'off plan' by wealthy foreign investors in China, Malaysia, the
Middle East and India, who own them but will never live in them. They will
stand permanently empty and idle, their windows bare, like huge stationary
ghost-structures, a monument to greed and funny-money.

Should you be tempted to believe that I am
exaggerating, I am going to quote extensively from an amazing article written
by Michael Goldfarb, a writer whose most recent book is;

'...Emancipation: How
Liberating Europe's Jews From the Ghetto Led to Revolution and Renaissance...'

I hope he will forgive me for re-quoting from his
piece here, but it is a superb illustration of what I have been trying to say.

Talking about the new property boom being
driven by foreign investors, he says;

"...This is what happens when property in
your city becomes a global reserve currency. For that is what property in
London has become, first and foremost. The property market is no longer about
people making a long-term investment in owning their shelter, but a place for
the world's richest people to park their money at an annualised rate of return
of around 10%. It has made my adopted hometown a no-go area for increasing
numbers of the middle class.

According to Britain's Office for National
Statistics, London house prices rose by 9.7% between July 2012 and July 2013.
In the surrounding suburbs they rose by a mere 2.6%. The gap between London
prices and those of the rest of the country is now at a historic high and there
is only one way to explain it.

London houses and apartments are a form of
money.

The reasons are simple to understand. In 2011,
at the height of the eurozone crisis, citizens of the two countries at the
epicentre of the cataclysm – Greece and Italy – bought £400m of London bricks
and mortar. The Italian and Greek rich, fearing the single currency would
collapse, got their money out of euros and parked it some place where
government was relatively stable and the tax regime was gentle – very, very
gentle. Considering that tax evasion in Italy and Greece was a significant
contributory factor to their debt problems, it just seems grotesquely cynical
to encourage this kind of behaviour.

But that's what Britain in general, and London
in particular, does. The city is essentially a tax haven with great theatre,
free museums and formidable dining. If you can demonstrate that you have a
residence in another country, you are taxed only on your British earnings.

And the savings on property taxes are
phenomenal. The property taxes on New York mayor Michael R. Bloomberg's $20m
London home come to £2,143.30 a year. That's $3,430. Clearly, the mayor bought
in at the right time. The Google executive chairman, Eric Schmidt, is reported
to be house-hunting here – he's looking in the £30m (about $48m) price range.
Yet he will pay a similar amount in property tax as Bloomberg does.

There are other facets of London real estate as
a medium of exchange. British gross domestic product has yet to return to
pre-crash levels, but the financial services industry has roared back. Banks
are paying out big bonuses again, and anyone looking for a safe investment is
getting into London property.

From the top of Parliament Hill, on Hampstead
Heath, look eastward. Out around the Olympic Park and beyond you see clumps of high-rise
apartment buildings sprouting like toadstools in a meadow after heavy rain.
These aren't being built to meet the calamitous shortage of affordable family
housing in the city; they are studio and one- or two-bedroom apartments.

The developments are financed by "off
plan" buying. Bonus babies look at the blueprints and put their money down
with no intention of living in what they've bought – just collecting decades of
rent. And it's not just those who work in London's financial district, the
City, who buy in. Hot money from China, Singapore, India and other countries
with fast-growing economies and short traditions of good governance is pouring
into London.

When I say property is money I mean it. An
astonishing £83bn of properties were purchased in 2012 with no financing – all
cash purchases. That's around $133bn.

The ripple effect of this frankly demented
situation is felt all over town. The foreign rich and the City rich (there is
some overlap) have made most of the centre of London unaffordable to any but
their own kind.

The overall economy of Britain certainly
doesn't justify these prices. Bank lending for businesses is flat, but mortgage
lending? It's as if the whole British economy is based on housing speculation
in the capital.

David Cameron's government seems to think that
is the case. Cameron may be pursuing austerity policies elsewhere in the
economy, doing virtually nothing to help subsidise employment or industry, but
his government has just started a "help to buy" scheme. The
government will guarantee up to 15% of the purchase price of a house up to
£600,000 ($960,000), if you have a 5% down payment.

Now it is beginning to feel that the next phase
of London's history will be one of transience, with no allegiance to the city.
I wonder whether those just parking their money here by buying real estate will
ever be able to provide the communal sensibility to help the city survive the
inevitable shocks it will experience in years to come.

How this story will end doesn't bear thinking
about. It seems a very reasonable bet, though, that those who use London
property as just another form of money aren't thinking about it at all..."

Saturday, October 19, 2013

I really dislike the whole concept of George
Osborne. I don't dislike him as a man, I don't know him, but I loathe his
entire context, and what he represents.

His latest outburst when discussing his trip to
China that 'Britain has lost its sense of ambition' and his calling on the
country to 'up its game', is precisely the kind of insultingly elitist bullshit
that really alienates vast numbers of people, and which really irritates me!

He probably wouldn't like me very much, if he
knew me, but he doesn't.

Osborne is one of the old Anglo-Irish aristocracy,
known in Ireland as the Ascendancy. He is the heir apparent to
the Osborne baronetcy. He was educated at St Paul's School,
London and Magdalen College, Oxford, where he was a member of the
elite Bullingdon Club, before working for the Conservative Party as a
researcher, special adviser, speechwriter and strategist. In 2005, he ran David
Cameron's 's successful party-leadership campaign and was made Shadow
Chancellor.

His father is Sir Peter Osborne, 17th Baronet, who co-founded the firm of fabric and
wallpapers designers Osborne & Little. His mother is Felicity
Alexandra Loxton-Peacock, the daughter of artist Clarisse Loxton
Peacock. His mother was a Labour voter, who worked for Amnesty
International.

What I particularly dislike about Osborne's
context is the fact that he represents a type and a class which we might have
not unreasonably thought had died out of British politics.

In many ways, his whole 'raison' is a pastiche,
a sort of cliché, a characterisation from a Bertie Wooster novel, a throwback
to another era, a bit part in 'Brideshead Revisited'!

He has just got back from China, where he has
been busily toadying up to the Chinese 'nomenclatura'!

Britain, as usual, has left it until the last
minute to 'discover' the new China, -
the Germans and other nations have been building strong ties with China for
some years -, and we must now parade our rather tattered credentials to make
ourselves their new 'best friend'!

Osborne has come back with all the Sino-zeal of
the newly evangelised missionary. He says;

"... “You cannot fail to be staggered
by the scale of the economic progress and the building that’s happening all
around you. It’s astonishing,” he said.

“I feel both energised by a trip like this because
there’s so much more Britain can be doing; I also feel a bit like, my God,
we’ve really got to up our game as a country, and the whole of the West has to
understand what is happening here in Asia.”

Benedict Brogan's piece in the Daily Telegraph
today amplifies the new Osborne enthusiasms.

He describes a man who has observed the
industrial and economic milestones that China has created in recent years, and
who enthuses about them, using both the language and the idioms of the public
school toff.

Suddenly, China is "...a country that left
him “staggered” by its success, as he contemplates how Britain should
rediscover its capacity for entrepreneurial dynamism..."

Note the emphasis on 'entrepeneurial dynamism'!

Brogan observes that "...His visit — which
marked a thaw in relations after David Cameron’s meeting with the Dalai Lama —
produced a wealth of useful advances for trade, notably landmark deals for
making Britain a global centre for investment in China’s renminbi currency..."

Predictably, the City of London will offer its
dubious financial services facilities to provide an offshore centre for untold
numbers of currency speculators to trade the renminbi, a currency that will in
the future prove to be an increasingly important payment mechanism. Quite how
the Chinese will respond after they have been repeatedly fleeced by the City's
army of currency spivs and wideboys is not reported.

What this facility will provide however, is an
additional offshore market outside Hong Kong for China's criminal money
launderers to utilise to move their criminal profits derived from the proceeds
of drug trafficking, product counterfeiting, people smuggling, software piracy,
and of course, vast swathes of political corruption.

The City of London will predictably not turn a
hair, and indeed, it looks as if this new deal has already been given a kind of
official seal of approval, arising out of Osborne's visit. What he has done of
course is to open the London market up to yet another source of vast swathes of
criminal and black money, but then he and his fellow toady, Bo-Jo (Boris
Johnson), seem less concerned about that as long as the money continues to
flood in to EC3!

No, Osborne was "...evidently galvanised
by what he had seen and learnt, and itching to take on those who caution
against engaging with the world’s largest dictatorship. Throughout, it seemed,
China’s success stood as a reproach to Britain’s loss of ambition..."

And this is what I truly resent about Osborne
and his class!

There is, it seems, this received political
wisdom that we in the UK have suddenly lost all our ambition, we have become
anaesthetised against wanting to be commercially and financially successful.

Nothing could be further from the truth. There
are countless good, well-educated, young men and women in this country who are
aching to get jobs, trying desperately to find work, any work, which will get
them off the benefits treadmill. Just trying to get through the week is a big
enough hurdle, never mind starting up a new business, or building an
entrepreneurial ideal.

The problem with politicians, and particularly
the posh toffs like Osborne, who have never missed a meal in their lives; who
have never wondered how next week's rent would be paid; who have never had to
decide whether to eat or get their shoes mended; is that they simply cannot
understand what it is like to be so potless, that you would do anything rather
than live in the way you are forced to.

It is all very well pontificating about the way
"...China teach(es) us that we have lost our capacity for hard work? He
points out the obvious cultural and political differences. “I’m not sure anyone
in Britain would want to have imposed on them the Chinese work ethic,” he sneers.
“But I do think there’s an ambition in the country and a sense of optimism and
'can do’ which our country had in the Victorian age and had at other points in
our history.”

Yes, he finally makes the point. China has now
reached the same stage as that of Britain in the Victorian era, with everything
that entails.

Osborne still, it seems, wants to live in a
twilight world where Britannia rules the waves, where the humble but deserving
poor doff their caps to him and his ilk as they trundle by in their sumptuous
carriages, and the plebs know their place!

He is reaching back to an age when Britain was
the sweatshop of the Empire, where there was no universal right to education;
where women did not have a vote; where there was no National Health Service; no
Industrial safety requirements; no efforts to make the workplace a more humane
environment; where miners died in their hundreds in huge pit accidents because
their owners were too mean to put in the necessary means of providing pit
safety; where the ordinary working man and woman had no political voice; where
the State could not be challenged; and the most usual means of penal sanction
for any crime worth more than a shilling was death by hanging. An age when
political corruption was rife, and the political class was bought and sold at
the hustings.

This is an age which he and his Cabinet friends
can yearn for, and clearly still do, and bear in mind, every single one of
these conditions is relevant to modern day life in China.

China is still among the most corrupt nations
on the planet, and its people are kept in their place in a straightjacket of
political repression. China does not recognise human rights, and it is not a
democracy within the real meaning of the word.

Watchdog groups believe that actual judicial execution
numbers greatly exceed officially recorded executions; in 2009, the Dui Ha
Foundation estimated that 5,000 people were executed in China – far
more than all other nations combined. The precise number of executions is
regarded as a state secret.

The level of corruption in public life is
breathtaking. A report from the
Carneigie Endowment for Peace reports that;

"...Though the Chinese government has more
than 1,200 laws, rules, and directives against corruption, implementation is
spotty and ineffective. The odds of a corrupt official going to jail are
less than three percent, making corruption a high-return, low-risk
activity. Even low-level officials have the opportunity to amass an
illicit fortune of tens of millions of yuan.

The amount of money stolen through corruption
scandals has risen exponentially since the 1980s. Corruption in China is
concentrated in sectors with extensive state involvement, such as
infrastructure projects, real estate, government procurement, and financial
services. The absence of competitive political process and free press
make these high-risk sectors susceptible to fraud, theft, kickbacks, and
bribery. The direct costs of corruption could be as much as $86 billion
each year.

The indirect costs of corruption (efficiency
losses; waste; and damage to the environment, public health, education,
credibility and morale) are incalculable. Corruption both undermines
social stability (sparking tens of thousands of protests each year), and
contributes to China’s environmental degradation, deterioration of social
services, and the rising cost of health care, housing, and education.

China’s corruption also harms Western economic
interests, particularly foreign investors who risk environmental, human rights,
and financial liabilities, and must compete against rivals who engage in
illegal practices to win business in China..."

Osborne seeks to deflect any reference to this
phenomenon. Brogan quotes him saying;

"...What does he say to those who fear
China’s dark side? “We’ve got to start by understanding that China is an
ancient civilisation with a long and proud history. If you start by
understanding that and treating that with respect that’s a good place to
begin.” China’s growth has lifted hundreds of millions out of poverty, he
points out. It is sometimes easy to forget that within our lifetime it was a
country of famine. “China is what it is. And we have to either be here or be
nowhere.”

That may be true, that may be what we have to
do, but let us not pretend that there is any virtue entailed by reverting to
Victorian standards of business conduct.

In Victoria's era, we may have run an
entrepreneurial Empire, but it was not difficult because it was based on a
complete disregard for human rights in exactly the same way that China's social
model works today. We should not lose sight of the fact that in doing business
with China, the Chinese Government benefits enormously as well, because by
being seen to be happily linked to the UK, it gives China international
credibility which she might otherwise not enjoy.

We cannot ignore China's shortfallings, no
matter how much money she dangles in our faces. The bankers can hardly wait to
start providing trading services for the Chinese currency, but it was ever
thus. We started out by turning the Chinese on to Opium, now we are going to
provide them with even more efficient money laundering facilities. Commercial
imperatives may predicate that we have to sit down at the same table with the
Chinese, but we would do well to use a long spoon!

Friday, October 11, 2013

In a Reuters report on Monday 7th October 2013, the
Serious Fraud Office (SFO) said that the law must be changed if critics want to
see more companies in court for misconduct.

Serious Fraud Office Director David Green said he was
constantly being compared unfavourably with U.S. enforcement agencies, which
prosecute far more companies for fraud.

Mr Green may feel not a little vexed at being compared
with his US counterparts, but the US officers have powers that David Green can
only dream about.

This is the seminal issue when we come to discuss
prosecuting serious financial crime in the City - do we want to bring the
fat-cats to justice, and I mean really bring the criminal bastards down to size
- or are we merely going through the motions of the criminal justice process,
and then standing down at the last minute and wringing our hands and saying how
unfair it all is that we don't have all the powers we need?

Now I am not saying that David Green is a whinger, far
from it, and I am really sure he wants to get some prosecutors and
investigators around him who really want to take the fight to the enemy. This
means finding men and women who are not going to do the usual, 'British' thing
and be content to start the fight against the City criminals with one hand tied
behind their backs.

No, what we need are some men and women with fire in
their belly, who are sick and tired of the grave injustices being perpetrated
in the name of criminal justice as far as the City fat cats are concerned, and
who want to even up the score! We need young prosecutors who are hungry for
promotion, who are not interested in playing by the conventional rules, and who
are willing to start bringing some really unpleasant pressure on the organised
criminals in suits who daily crowd into the City to commit financial crimes.

This is what happens in the United States, young
prosecutors start off really wanting to stick the boot in, because in so doing,
they make a name for themselves as good prosecutors, and this aids and assists
their career prospects. In the UK, all too often young prosecutors see their
role as a rather refined and gentlemanly one, where it is not considered 'good form' to go for the jugular, and where
their role is a high-minded process!

The SFO (so it is claimed) faces a much higher burden of
proof than U.S. agencies, having to show a company's board is complicit.

"The email trail has a habit of drying up at the
middle management level," Green told an American Bar Association
conference on white collar crime on Monday.

Of course it does, so what? There are other ways of
obtaining evidence against those at the top of the organisation without
worrying about email trails. Obviously the trail dries up at the middle
management level, these people are not stupid. Senior management insulates
itself against the every-day operations and decision methods, so as to be able
to deny any association with any wrong-doing when it comes to light.

But, do we think they don't hear the gossip, when a
trader in the dealing room suddenly pulls off a spectacular 'hit'. Do we think
they aren't aware when some dope runs up an enormous loss.

Sure, there are traders
who can cover up for a while, but City dealing rooms and trading floors are hot-houses
of gossip, rumour and innuendo, and everything is known at the end of the day.

Does anyone seriously believe that Sgr Roberto Diamante and his capo-regimes
didn't know about the LIBOR shenanigans?

The real trick about being a successful white-collar
prosecutor is to treat every posh defendant as if he were the same as a Peckham
drug-pusher - and expect him to behave in the same way - to hire the best
shyster he can afford, to get the best brief; to splash his money around on
pre-trial legal actions, trying to disrupt the prosecution's trial preparations;
to find ways of buying false and perjured evidence; to interfere with witnesses;
to make up false documents and to lie through his teeth in the witness box!

This means the prosecution must also find every nasty
trick in the book to hit him with during the investigation, and adopt an
outright refusal to 'play nice' with his solicitors.

David Green is adamant that; "If it is in the public
interest for more corporate prosecutions, the test (of proof of complicity)
must be lowered."

We shouldn't be worrying about this - it will take years
and years to accomplish and the lawyers will fight tooth and nail to prevent it
going through Parliament successfully!

There are other ways of dealing with these cases.

The British need to stop being so mealy-mouthed about investigating
white-collar criminals, and begin to use other techniques.

We need to start learning again how to 'turn' potential
defendants into witnesses. We did it back in the early 1980s, and it was hugely
effective.

In the US, they invite a putative defendant to become a 'cooperating'
witness, and they spell out to him the consequences of failing to cooperate
with the prosecutors. He is offered a deal he would be a complete idiot to
refuse. In return for clemency, he is expected to work with the prosecutors, to
give evidence against his co-defendants, to engage in taped conversations with
them in an attempt to entrap them into making admissions of guilt, etc.

A short extract from 'Insider Out', the book written by
Dennis Levine, a major Insider Dealer, demonstrates just how the US system can
work.

"...Liman (his lawyer) spelled out the situation for
me. This was America. I had freedom of choice. One, I could plead not guilty
and stand trial. But, I had no chance of winning. The prosecutors would
probably convict me under RICO (The Racketeer and Corrupt Organisations Act),
and throw me into prison for a long time, and, quite literally, confiscate all
of my possessions and throw my family on the street. Two, I could plead guilty
and refuse to cooperate, but I would have to plead to RICO. The consequences of
choice number two, Liman said, were similar to those of choice number one.
Three, I could agree to forfeiture of the proceeds of my trading and plead
guilty to lesser charges, which the government would allow me to do, if I
agreed to cooperate; we could undoubtedly negotiate a similar settlement of the
civil charges.

'...You're going to do some time...' Liman warned. But
choice number three would result in a shorter sentence and - far more
importantly - would allow my family to survive. He recommended that we enter
into plea-agreement negotiations with the Government..."

This is how to deal with white-collar criminals, and the
US authorities have refined their tactics over the years. Plea bargaining
systems enable prosecutors to go after criminals who might otherwise be able to
remain free from the impacts of the criminal justice process. The systems they
have invented were originally designed to go after the 'Cosa Nostra', the
Sicilian organised crime families who controlled major crime in most US cities.
They quickly realised that financial criminals on Wall Street behave in exactly
the same way as people whose names almost inevitably end in vowels, and they
adopted the use of the organised crime investigation and prosecution tactics to
deal with them.

The Americans have no qualm about likening Wall Street
wise guys to Mulberry Street wise guys, and they make good use of the tactics.
That is why I get so angry and depressed when I hear British regulators and
prosecutors talking about 'light touch' regulation when it comes to dealing
with the City filth! I get angry when I hear them insouciantly talking about
how to handle City crime, and particularly when they ask me, in their
condescending way, what do I know about this problem! I want to ask them why
they are so sure that there are not other ways of dealing with the Square Mile
robbers! I want to know why they are so unwilling to think outside the box and
make a play for the biggest criminals on the patch!

I am afraid it all comes down to something the
criminologist Edwin Sutherland once said about white collar criminals. In his
seminal book 'White Collar Crime' published in 1949, Sutherland said;

"...‘There is a consistent bias involved in the
administration of criminal justice under laws which apply to business and the
professions and which therefore involve only the upper socio-economic
group..."

In 'White Collar Crime', Sutherland argued that the
behavior of persons of respectability, from the upper socio-economic class,
frequently exhibits all the essential attributes of crime, but that it is only
rarely dealt with as such. This situation arose, he said, from a tendency for
systems of criminal justice in Western societies to favour certain economically
and politically powerful groups and to disfavour others, notably the poor and
unskilled who comprise the bulk of the visible criminal population.

But there is no reason why we cannot demand that our
prosecutors start finding themselves some cojones, and get some new tactics to
take on the bad guys! We have too many prosecutors hiding behind the process
and not having the bottle to step out from behind the immense barriers that the
Police and Criminal Evidence Act can pose, and start thinking laterally. You
can take on the banksters without falling foul of PACE! You can operate
effectively without failing to comply with the disclosure provisions.

What you need is good legal knowledge, an ability to
outsmart the slimy City solicitors, all of whom have jumped on the bandwagon of
the financial crime phenomenon, and the balls to take on the barristers in
Court, and play them at their own game! At the end of the day, it is all about having
the moral courage to stick to your determination to see these men behind bars,
and that means finding all the reasons to charge these people with crimes, not
finding reasons not to bring prosecutions. If you can't get them for specialist
fraud charges, then think of something else!

I know that there are many young prosecutors who, reading
this, would say, '...who the hell is this guy to say this to us...' I know this
may sound like a tall order, but my Fraud Squad colleagues and I who did it in
the past, and who laughed in the faces of the pompous lawyers as the Old Bailey
judges sentenced their cringing whining clients to periods of imprisonment for
their crimes, know how it's done, and if they are interested we can show them
how to do it.

There was a time when we were required to seek the
approval of a Government Minister before we could bring certain charges under
the Companies' Acts, and the approval was almost always refused! So we started
to bring charges under the Theft Act and other criminal statutes which didn't
need civil servants to crawl all over our evidence, and we got convictions.

Charges could have been brought against any number of
financial practitioners who had engaged in the defrauding of clients under the
PPI frauds. Then, when they were charged, they could have been invited to consider
giving evidence against their managers, in return for lenient treatment for a
guilty plea! The same tactic could have been used against the managers and when
charged, invited to give evidence against their directors, in return for
leniency and a guilty plea. This is a fairly aggressive tactic, but it works,
and prosecutors must consider its use.

The real truth is that prosecutors have got to stop
wanting to have lily-white hands, and be prepared to get down into the street
and start mixing it up with the defence lawyers. You may rest assured that the
defence will pull out every stunt in the book to get their clients acquitted.
We used to have barristers who would work with us on the preparation of the
cases and who would advise and guide on the evidence they needed for the
charges they wanted to bring.

They did not prejudice their professional status
in giving of their very best skills to help us win our cases.

Next year, Britain introduces what are mistakenly
referred to as U.S.-style plea bargaining deals, otherwise known as deferred
prosecution agreements (DPAs), whereby a company is charged but the prosecution
is suspended in return for a fine, compensation or other sanctions.

David Green realises, as I have done for a long time that
DPA's are a waste of time.

"If the prosecution of a corporate is so difficult
as it is at the present without the change I propose, why should a corporate
agree to enter a DPA at all?" Green said.

This is precisely the point. Prosecutions have got to be
made more certain, and lengthy prison sentences a certainty upon conviction.
Any man facing the likelihood of 15 years inside for a white-collar crime, will
certainly think twice if he is offered a 'get out of jail free' card! We have
got to start treating City crime as serious organised crime, which is what it
is, and stop pussy-footing around with these men who are making millions of
pounds and walking away scot free.

David Green has said the SFO would not hesitate to
prosecute even difficult cases, and that "blockbuster" funding
reserves were on tap to pursue big cases such as the rigging of Libor, the
benchmark London interbank offered rate, and others.

This is good news indeed, strong budgets are needed to go
after the big City players. The irony is that after a couple of really good
convictions, there would be an wholesale change of attitude among those
chancers in the Square Mile who might be persuaded to give it a run, in the
mistaken belief that they would not be prosecuted.

Once the message got home that the SFO would come down on
City fraud like a ton of avenging angels, there would be a big change of
attitude towards City crime. That is because everyone who works in the City is
a 'percentages' man, every deal is looked at with the primary enquiry, 'what's
in this for me', and if the chances of an extended stay inside outweigh the
promise of a financial profit, they will not do it!

It is simply because there has been no likelihood (and I
mean absolutely none, nada, zilch, zero chance) of any of these people even
being invited in to Elm House for a little chat about their conduct, that they
have been committing these crimes with the degree of impunity they have
demonstrated and getting away with it for so long.

So, we need new powers for the SFO, we have got to make
City financial crime an organised crime that doesn't pay; we have to get a team
of experienced detectives into the SFO to help the staff there get the evidence
they need; we need to see aggressive, angry young lawyers with fire in their
souls who can reflect Oliver Cromwell's aphorism '... I had rather have a
plain, russet-coated Captain, that knows what he fights for, and loves what he
knows, than that which you call a Gentle-man and is nothing else...' and we
need to find a new attitude of moral certainty among those who will regulate
this marketplace.

At present, the City of London is a criminal sink, and it
has been getting away with too much for too long. It has been allowed to
because the politicians and civil servants, and their satraps have pulled the
claws and blunted the teeth of the SFO to such an extent, that it has become a
laughing stock.

Monday, October 07, 2013

Barclays Bank, one
of the UK's leading criminogenic banking institutions, took a full page
advertisement on the back page of the Sunday Times, asking the unbelievably
trite question 'Does your bank have free wi-fi in its branches? Make Barclays
your bank".

What complete and
utter bollocks!

What is it going to
cost Barclays to extend Broadband to the public sectors in their branches? Why
on earth would Barclays think that any sensible person in their right mind would
be persuaded to bank with this flaky bunch of rogues, just because of the offer
of a free wi-fi connection?

We have to examine
this advert in the full context of the wrongdoing that Barclays has carried out
in recent times, and we have to ask ourselves how great their arrogance has
become, when they clearly believe that all they have to do to make themselves
attractive to new customers is to offer them free wi-fi?

You can just imagine
their marketing people examining the proofs for this page lay-out, and saying;

"...Oh yes, that's
fantastic, a free wi-fi offer, that'll bring the mug-punters into the counters
in their hoards..!"

This is all that
Barclays think they have to do to restore their grubby and tattered reputation!
This is the limit of their imagination and demonstrates beyond peradventure
that they have not learned any lessons from their recent brushes with the law.
As far as they are concerned, as long as they can dangle some cheap bauble to
the potential marketplace, then they think that the general public will snap up
the opportunity to open an account with them, without any further thought!

Let us just refresh
our memories about some of Barclays more memorable forays into the unfettered free-market
capitalism so beloved of their former Capo, Sgr Roberto Diamante!

Barclays was fined
£290m ($450m) in June 2012 for trying to manipulate a key bank interest rate
(LIBOR) which influences the global cost of loans and mortgages.

Its traders lied to
make the bank look more secure during the financial crisis and, sometimes -
working with traders at other banks - to make a criminal profit.

In August 2010, Barclays
Bank had a sanction-busting fine
approved . Barclays had agreed a settlement with the US Justice Department over
dealings with Cuba, Iran, Sudan, and Burma, all countries subject to US
sanctions.

A US judge approved
a settlement under which Barclays Bank was fined $298m (£191m) for
sanctions-busting. However, despite approving the deal, which meant that
Barclays avoided a criminal prosecution, Judge Emmet Sullivan still queried if
the fine was enough.

It looked like the
bank was "getting a free ride here," he said. Barclays refused to
comment on the affair.

In 19 January 2011,
Barclays were fined £7.7m by the UK regulator for misselling Aviva’s global
balanced income and global cautious income funds. This activity was defined as
“a damning indictment” of the banks’ sales-driven advice models.

The bank had to
return £59m in compensation for failing to provide adequate investment advice
to more than 12,000 of its customers, many of whom were retirees who suffered
losses in the financial crisis.

The FSA said that Barclays
had failed to ensure that two Aviva funds were suitable for clients
who invested nearly £700m in them between 2006 and 2008. Many were seeking
additional income and Barclays staff failed adequately to explain the risks
involved, the regulator said.

In July 2013 Barclays
bank was ordered to pay a fine by the US energy regulator for allegedly
manipulating electricity prices.

According to the Federal Energy Regulatory Commission (FERC), who proposed the
fines in October last year, Barclays had been manipulating energy prices
between November 2006 and December 2008 in states such as California.

The bank and four of its power traders, Daniel Brin, Scott Connelly, Karen
Levine and Ryan Smith, are expected to have to pay a total of $453 million
(£299 million) within 30 days to the US Treasury.

On Tuesday night (July 16th) a report outlined Mr Connelly must pay a $15
million fine while Mr Brin, Ms Levine and Mr Smith face a $1 million fine each.
Mr Connelly, who is the managing director for North American power at Barclays,
is facing the largest fine because he is believed to be the leader of the
scheme.

Additionally, Barclays must give up $34.9 million in profits, which will be
paid into low-income aid schemes in California, Arizona, Washington and Oregon.

FERC based its claim against Barclays on a series of emails between traders,
which suggested they were working together to manipulate the index for energy
pricing in Western parts of the US. It said that the traders, who have now left
the bank, knew they had committed unlawful activities as they had been losing
money through power markets deliberately to improve the bank's financial
position.

However, Barclays contested the findings. In a statement, it said: "We are
disappointed by the action FERC took today. We believe the penalty assessed by
the FERC is without basis, and we strongly disagree with the allegations
made."

It added that its trading was within the law and that it had cooperated fully
with the FERC on the matter. Moving forward, it said: "We intend to
vigorously defend this matter."

Subsequently, Barclays
Bank has further admitted that '...it was likely to suffer a £50 million fine
for the handling of its Qatari bail out...'

These are just reports
of recent actions in which Barclays have found themselves on the wrong side of
the law and there are others.

I have not touched
on Barclay's contribution to the PPI deliberate criminal fraud scandal in the
UK, nor its anti-money laundering failures where the FSA singled out Barclays
for a large transaction reporting fine of £2.45 million in 2009.

When it comes to
reports about money laundering however, Barclays seems to be able to count on a
lot of friends to keep its dirty dealings out of the public gaze.

One of my regular
readers, Carol, has specific concerns about the way in which Barclays has
conducted itself in recent years, particularly with regard to the way in which
it has been engaged in alleged money laundering activities.

Carol is a shareholder,
and attends Barclays public meetings and she does what she can to get details
of certain specific allegations of wrongdoing by Barclays. She is constantly
obstructed and denied information, which, as a shareholder, I believe she is
entitled to receive.

She has written to
the Financial Conduct Authority to seek their help in obtaining details of
alleged wrong-doing entered into by Barclays Bank. The latest letter she has
received from the FCA is typically obtuse, but demonstrates the degree to which
the regulators are 'captured' by their constituency!

The letter notes
that Carol,

"...continue(s) to have difficulty in resolving your concerns
about Barclays Bank plc, and that you would like us to comment on these matters.
I have reviewed previous correspondence with you, and note that in 2008 the Financial
Services Authority (specifically ............) advised that we would not be corresponding
with you any further on this subject. I would confirm that the position of the Financial
conduct Authority (FCA) has not changed, and ...the FCA will not be entering into
further correspondence-about Barclays Bank plc.

Any further
correspondence received from you on the subject of Barclays Bank plc will be placed
on file but will not be acknowledged or responded to.

I hope this
is helpful to you and has confirmed our position on this subject..."

So, whatever has
gone on, it is clear that the Regulator does not intend that the shareholders
should have any right to know! With friends like these, what does Barclays have
to fear from any meaningful regulatory intervention?

So, my advice to
anyone who is thinking of opening an account with Barclays Bank is;

"...Don't be
fooled by these cheap gee-gaws, these silly offers of free wi-fi in their
branches...."

Ask yourselves some
searching questions like whether Barclays are a suitable bank to be investing
your money in, considering all the fines they are receiving for breaking the
law at every possible opportunity.

This is much closer
to the point - do you want to be the client of a bank whose criminogenic
activities would make Al Capone blush for shame? Are you really so gullible
that the offer of free wi-fi is going to make you overlook all the wrongdoing
that this once respected institution has engaged in?

I very much doubt
it, but I do believe that we have a constant duty to remind ourselves of the
dishonest actions of those who want our money!

About Me

Having spent my career dealing with financial crime, both as a Met detective and as a legal consultant, I now spend my time working with financial institutions advising them on the best way to provide compliance with the plethora of conflicting regulations and laws designed to prevent and forestall money laundering - whatever that might be! This blog aims to provide a venue for discussion on these and aligned issues, because most of these subjects are so surrounded by disinformation and downright intellectual dishonesty, an alternative mouthpiece is predicated. Please share your views with what is published here from time to time!